If last week’s House Communications and Technology Subcommittee hearing on broadband infrastructure is any measure, there appears to be growing consensus that any new infrastructure bill should include dollars for broadband – arguably the most essential infrastructure for American progress and productivity. As Chairman Blackburn observed, “we are all tired of hearing stories about parents driving their children to the local McDonald’s for Internet access in order to finish homework assignments. We owe them better, period.”
But the hearing also made clear that Congress continues to have significant concerns around how to design such a program to ensure that any dollars designated for broadband are spent wisely. Chairman Walden was correct in noting that “too often our data is insufficient and investments are not targeted where they can do the most good. Until we know where broadband is and where it is not, we will continue to make the same mistakes that have slowed rural buildout for years.”
This was certainly the case with NTIA’s Broadband Technology Opportunities Program (BTOP), which targeted funding at both “unserved” and “underserved” areas, defining both terms too broadly. As a result, the program funded many projects that overbuilt existing broadband infrastructure. Indeed, at times, BTOP dollars may have been used to overbuild facilities already being subsidized by other government programs, like the E-Rate program or the Agriculture Department’s Rural Utility Service programs.
Fortunately, there is a solution. We support an approach that places responsibility on the FCC to disperse any new broadband dollars through its Connect America Fund (CAF) and Mobility Fund (MF) programs. These two programs, as further refined in two orders adopted by the FCC last month, provide clear evidence that the Commission has the expertise and the tools to manage a data-driven process that will ensure that any incremental broadband funding is directed where broadband does not currently exist and is needed the most.
Let’s examine the virtues of the FCC’s approach.
First, the FCC programs narrowly target specifically-defined “unserved” areas. The CAF II auction will include approximately 307,000 census blocks and 1.5M customer locations across all 50 states where price cap carriers declined the 2015 CAF money, as well as areas not part of the CAF II auction but designated “extremely high-cost” or “high-cost” but lacking 10/1 mbps service. For the MF II auction, the target is areas that lack 4G LTE service with “a minimum advertised download speed of at least 5Mbps.”
These specific definitions ensure that dollars are efficiently targeted to where they are truly needed and that they are not spent overbuilding areas where broadband currently exists.
In both programs, the FCC develops the list of eligible areas based on Form 477 data – which is filed and updated regularly and certified by all carriers. Is the Form 477 data perfect? No, of course not – the rules and techniques for measuring and reporting broadband coverage are still evolving. But the data set represents exactly the type of detailed service information on which deployment decisions should be based. And after eligible areas are identified, the FCC conducts a data challenge process to further refine the areas targeted for support. This process allows all parties to update or correct their own filed data (for example, to demonstrate coverage where it has been recently deployed) and/or dispute coverage claims of other providers (to show that coverage does not exist as alleged). Importantly, it will also allow state and local entities in areas that do not have broadband service to challenge what providers have filed.
Moreover, the process is constantly improving. The FCC is currently seeking comment on how to further refine the challenge process to provide clear guidance to all parties on defined terms, submission requirements and clear standards for FCC decision making. When those refinements are finalized, the FCC’s process will yield the best data set currently available on the status of broadband deployment in America.
This data-driven approach will ensure that programs that spend taxpayer dollars do so as efficiently as possible and target those areas that need the dollars the most. And to be sure, we believe it is dollars (not tax credits) that are needed to get the job done. Broadband service at a minimum of 10/1 mbps is now available from two providers in 91% of all developed census blocks in the United States. On the mobile side, 99% of the population now has access to a LTE network. These statistics make clear that CAF and MF dollars are going to the truly hard to serve and sparsely populated areas, where providers have not been able to make an economically-viable case for infrastructure deployment. Tax credits alone will not attract the type of capital necessary to build out these areas or deliver broadband to the impacted communities.
To be clear, current CAF II and MF II dollars are unlikely to be sufficient to complete the job of getting broadband deployment to all these remote areas. By our estimate, the $198M/year that will be made available through the CAF II auction is only 21% of the FCC’s own calculated deployment costs for all eligible areas. To address this, bids will be scored and ranked, regardless of geography, from lowest to highest with support awarded to winning projects until funding is exhausted. And we fully expect the budget to run out before all eligible areas are funded. But these programs are the best way to use available dollars and, importantly, these programs leverage private investment to the maximum extent possible by awarding funds to the bidder willing to get the job done at the lowest cost. It’s a true public-private partnership.
There is one final way that the FCC’s programs excel. Any program should be technology neutral – supporting both wireless and wireline broadband, in all its forms. Fiber builds are great where they make fiscal sense but, unless these programs suddenly get unlimited budgets, fiber is not feasible in many of these remote areas. In many places, a wired 10/1 mbps service or a LTE build may be the only viable broadband solution for the community. Unlike the BTOP programs, which had rules that skewed toward specific technologies, the FCC’s programs support broadband in all its forms and are designed with the single-minded focus of getting quality broadband to the areas the market is not reaching.
If Congress is looking for a data-driven, efficient and effective mechanism to disperse newly allocated broadband dollars, it need look no further than the experts at the FCC. We believe the CAF and MF II programs represent the best path to delivering on the broadband promise to all Americans.